The Middle Class Is Shrinking

The percentage of families earning middle-class incomes fell in nearly nine out of 10 major metro areas across the country between 2000 and 2014, according to new research by the Pew Research Center. The study defined middle-class households as those making between two-thirds and twice the national median income. That was roughly $42,000 to $125,000 a year for a family of three in 2014, though adjustments were also made for the cost of living in different areas.

A look at the 100 metro areas with the sharpest decline in the percentage of people in the middle class. In these areas, the middle class declined by more than 4 percentage points. The decline in the New York-Newark-Jersey City area was not as steep, falling from 50.7 to 48.1 percent.

A decline in the middle class doesn’t necessarily mean a decline in income. In some areas, the middle class has been replaced by the upper class (currently, income above $125,000 a year for a three-person household). There isn’t one factor that helps explain why these areas are doing so well. Some, like the Midland, Tex., metropolitan area, are beneficiaries of oil. Others have strong white-collar sectors, like government (in the Washington area) or technology (in the Bay area).

In some areas, the decline of the middle class raised the proportion of people in both the upper class and lower class. The hollowing out of the middle class is rooted in a mix of technological change and globalization rewarding those people whose jobs can’t be outsourced or automated: high-skilled and low-skilled workers. Nearly half of the metro areas that Pew studied have experienced some kind of growth on the low and high end.